SERV - Embedded Expectations Analysis - 2020 07 21
ServiceMaster Global Holdings, Inc. (SERV:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 33.9x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management appears concerned about various initiatives, cancel rates, and costsSpecifically, management may be exaggerating the success of the Terminix brand in Q1 before the coronavirus disruption, as well as their outlook for disinfection service demand. Also, management may be exaggerating the continued interest of potential suitors related to their brand sale, and they may be downplaying concerns about the suspension of their summer sales program and about cancel rates in early Q2. Moreover, they may be downplaying concerns about their Residential Pest Control business, and they might have concerns about headwinds to the fumigation market in California. Finally, they may be concerned about their ability to maintain lower G&A costs and they might have concerns about headwinds related to labor costs
ServiceMaster Global Holdings is a holding company. Through its subsidiaries, the company provides services to residential and commercial customers in the termite, pest control, cleaning and restoration markets, operating through a network of company-owned locations and franchise and license agreements. The company's portfolio of brands includes Terminix (residential termite and pest control), Terminix Commercial (commercial termite and pest control), Copesan (commercial national accounts pest management), ServiceMaster Restore (restoration), ServiceMaster Clean (commercial cleaning), Merry Maids (residential cleaning), Furniture Medic (cabinet and furniture repair) and AmeriSpec (home inspections).
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